Economic determinants of the use of energy and materials in the U.S. and Japanese iron and steel industries

Energy and materials use in the Japanese and U.S. iron and steel industries is assessed using process engineering analyses. The energy required for producing a tonne of steel in the U.S. (20.99 GJ) is 50% greater than that in Japan (13.18 GJ). The structures and technologies of the two industries are examined to unravel the basis for this difference. The engineering studies are complemented by an econometric analysis of the cost structures of the two industries and factor substitutabilities. The evaluations show that in the U.S. energy and capital are substitutes, but that labor and energy are complementary economic factors. These conclusions are even stronger for the case of Japan, whose technology may serve as a model for U.S. technological change over the medium term. Thus, governmental policies that stimulate the construction of new mills will have an energy conserving effect, but may have a negative impact on employment.